E-commerce Is Hottest Thing At Net Show

Published 4:00 am, Thursday, March 12, 1998

If the rows upon rows of booths at the Spring Internet World show here are any indication, then the Internet community is sold on e-commerce -- or at least, on hawking tools for e-commerce.

Most of the 600 booths at the fifth annual conference were offering software and services to sell products over the Internet, and e-commerce was all the buzz of the keynote speech and sessions. Some 50,000 people are expected to attend the weeklong conference.

"Internet commerce is the dominant theme. That's where the action is," said analyst Vernon Keenan of Zona Research Inc. in Redwood City.

Many merchants are trying to duplicate the success of Dell Computer, the Round Rock, Texas, computer maker that sells more than $1 billion a year in products online to companies and consumers.

The rush to cash in on e-commerce has resembled a stampede among both start-ups and billion-dollar companies.

While virtual retailers such as Amazon.com, Travelocity and CDnow are offering books, airline tickets and music CDs, others -- like Bay Area companies Commerce One, Intershop Communications, CyberSource and VeriFone -- are moving into cyberspace such traditional business operations as distribution, customer service and transactions.

"As PC prices drop and more are sold, a lot of people are calling in for service and support and can't get through," said Jimmy Treybig, chairman of Smart Technologies Inc., an Austin, Texas, maker of e-commerce software. "PC makers need an online operation that let people bypass customer support and do their own searches for information on prices, products, upgrades and troubleshooting. The Internet is that vehicle."

And then there are heavyweights IBM, Microsoft, Cisco Systems and Apple Computer: All of them are selling increasingly more products over the Internet.

The payoff is potentially staggering. Analysts predict e-commerce sales will mushroom into a $80 billion to $255 billion business by the year 2000. A forthcoming White House study forecasts a $300 billion market by 2002.

Although the figures vary dramatically, they share the same conclusion: The Internet is dramatically changing the way Americans shop and merchants sell goods and services.

An increasing number of time-constrained Americans are smitten with the idea of having a 24-hour shopping service with easy access, wide selection and prompt delivery.

As electronic commerce grows in popularity, retailers are shifting to online operations and streamlining storefront divisions.

In January, software retailer Egghead shut down its 80 stores nationwide, laid off 800 employees and renamed itself Egghead.com in a bid to capitalize on the breakneck growth of Internet commerce. Retail heavyweights Barnes & Noble, the Gap and 1-800-FLOWERS have all gone online while maintaining physical stores.

Nonetheless, there is skepticism that e- commerce -- like the Internet industry -- may be over-hyped.

"The current guesstimates of e-commerce are akin to trying to estimate the GDP of a state based on the number of trucks passing by on a highway," said analyst Chris Stevens of the Aberdeen Group in Boston. "It is absurd."

Meanwhile, some consumers are reluctant to purchase products over the Net. "When I buy something, I want to pick it up and test it," said Tracy Condon of Santa Monica. "I don't feel comfortable about buying pottery and glass over the Internet."

More than 20 percent of 1,000 Internet users polled by World Research Inc. said they don't shop online out of fear that virtual pirates will steal credit-card information and other sensitive personal information.

"You are more likely to get robbed on the street than to have credit-card numbers stolen by fake Internet merchants," said Stephan Schambach, president and CEO of InterShop in San Francisco. "It is simply not that easy to obtain a license to sell products online. The process takes up to six months, and you have to fill out a lot of forms."